Startup Cash Flow and Talent: Prepare for Every Scenario, Including the Worst

2. What is a startup’s deadliest challenge? Cash flow + talent = success. For an early-stage startup, the most important number is cash on hand. How many months could you survive with no revenue? That is a question to consider every day. The safest answer is eighteen months, but in practice that is not achievable. Ask whether you can survive a year with no revenue; even that is impressive. Once a company has some scale and no worries about money, what matters most? Still cash flow: how much comes in today, how much goes out, and whether the month ends positive or negative. Because you have both receivables and payables, pay closer attention to cash flow. You may have high sales, but if customers have not paid and everything is receivable, you still have no cash. What matters is whether money actually comes in. Besides cash flow, the other calculation concerns finding the best people. How do you negotiate with them? Lei Jun says the secret is simple: if this is truly the person you need, the only principle is to get them on board—not calculate how much money the company has and how it can afford them. In personnel management, especially in high-tech companies, talent is the key. The boss may have to take the subordinate role while key technical people call the shots. You could even say a boss who cannot humble themselves is not a good boss. #LeiJunEntrepreneurialPrinciples --- Time for Robin again: Startups fail for many reasons, but a break in funding is probably the most common. Founders must always watch cash flow. They cannot have just one script in which fundraising goes smoothly and solves the problem. Smooth business development and fundraising are among the rarest scenarios. More common are business setbacks, even harder fundraising, key team members leaving, and giants entering. Founders need scripts for different situations, even the worst. Stable cash flow only ensures you do not lose in the short term. To succeed, gathering suitable talent matters most. When you meet the right expert, find a way to attract them. Romance of the Three Kingdoms also tells the story of Liu Bei’s three visits to the thatched cottage. Companies differ. The previous post mentioned Netflix’s very high pay, hiring only top A-players, strict removal of the weakest performers, and “we are not family or brothers” approach: harsh, but effective. Other companies aim for a family atmosphere. Each has advantages and disadvantages, expresses a particular culture, and attracts corresponding talent.